Engaging with Suppliers on Sustainability Saved Companies Billions of Dollars in 2016

A new report conducted by the Carbon Disclosure Project (CDP) on its members has revealed the considerable greenhouse gas reductions that many companies are accomplishing in their supply chains.

The study focused on the 89 member companies of the CDP’s supply chain program, including Fortune 500 organizations like Walmart, BMW, and Microsoft. These 89 companies have a combined purchasing power of $2.7 trillion, which they have been leveraging to encourage suppliers to reduce their Carbon footprints. The CDP study calculated that as a result, these companies’ suppliers cut 434 million tons of CO2 emissions in 2016. This impressive figure yielded positive results for the companies as well as for their suppliers. In 2016, those same suppliers achieved $12.4 billion worth of savings from emissions reduction activities. These savings, created largely from lower energy costs, can benefit the buyer companies as well, as the savings are passed on through lower costs of goods and services.

Despite these positive outcomes, the report points out that while those who do engage with their supply chains are seeing improvements, these proactive companies are still in the minority. Only 22% of companies reporting to the CDP engage with their supply chains on the issue of carbon emissions. It is clearly easier if you’re a large company and the lack of visibility and complexity of many supply chains may present sufficient barriers to entry to stop companies attempting such action. What is clear is that as more studies such as this verify the pay-off of action, more and more organizations will undertake serious efforts to effect change throughout their value chains.